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NEW DELHI: Oil & gas major Reliance Industries (RIL) extended last week's gains as investors flocked to buy the stock after the UPA government decided to hike gas price from April 2014.

The stock finally ended at Rs 882.80, up 2.43 per cent, on the BSE. It touched a high of Rs 884.95 and a low of Rs 859.85 in trade today.

The stock which has the second largest weight of 9.24 per cent on the S&P BSE Sensex has rallied nearly 10 per cent since June. The rally extends from the closing price of Rs 806.30 made on 31st May 2013 to today's closing price of Rs 880.80.

Over the past six years, the stock of Reliance Industries has languished especially after the fall in the company's gas output from its offshore field.

The Cabinet Committee on Economic Affairs (CCEA) approved doubling of gas prices for all domestic gas producers based on the Rangarajan Committee recommendations. The gas price will be hiked to $8 per mmbtu against the prevailing gas prices of $4.2/mmbtu.

"The hike in gas price is EPS accretive for upstream PSUs even after raising their subsidy burden estimates. Also, it is positive for private gas producing companies such as Reliance Industries. Moreover, higher gas price will incentivize upstream companies to raise production from newer blocks," said Angel Broking note.

The brokerage has raised RIL's EPS by 6.8 per cent for FY2015.

"RIL is likely to be a key beneficiary of the increase in gas price as unlike PSU upstream companies it does not bear any subsidy burden. We believe that the increase in gas volumes from KG D6 block will be a key catalyst for RIL. However, given the recent rise in the stock price, we maintain our Neutral rating on the stock," the report said.

CLSA is of the view that RIL will be the neatest beneficiary of the price hike.

"Although we already model this hike for Reliance, investors have sounded skeptical of this increase in our recent discussion. Therefore, this price hike will make the FY15 EPS growth of 19 percent more believable and could take the stock near our target of Rs 930/share," the report said.

According to Ambit Capital, the decision is a huge positive for all domestic gas producers and it would boost RIL's FY15-16 earnings 4 per cent respectively.

"Apart from higher prices for the natural gas produced by the company from its Krishna Godavari D6 block, RIL should also start deriving benefits from its investments in the refining and petrochemicals businesses," say analysts.

At the company's recent shareholders meeting, Mukesh Ambani had said that the conglomerate would pour in $27 billion over three years across all its businesses. This should lead to doubling of operating profits within five years.

RIL will also be a major beneficiary of the government's decision to raise customs duty on polymers in May 2013 and the introduction of a 15% investment deduction allowance in Budget 2013-14, ET said in a report.